Barclays Bank PLC (“Barclays”) announced an investor guidance
notification today regarding the iPath® Bloomberg Natural Gas
Subindex Total ReturnSM Exchange Traded Notes (the “ETNs”). The
ETNs are listed on the NYSE Arca exchange (the “Exchange”) under
the ticker symbol “GAZ” and are linked to the performance of the
Bloomberg Natural Gas Subindex Total ReturnSM (the “Index”). This
investor guidance notification follows one announced by Barclays on
March 8, 2017 regarding the decline in the daily redemption value
of the ETNs.
The daily redemption value of the ETNs on December 7, 2017 hit
an all-time low of $0.062 per ETN. At the current time, the
daily redemption value of the ETNs would drop to $0 if the Index
decreases by another 6.83% from the Index closing level on December
7, 2017. Additionally, as accrued investor fees in the ETNs
grow over time regardless of the performance of the Index, the
magnitude of the decrease in the level of the Index required for
the daily redemption value of the ETNs to drop to $0 will also
reduce progressively.
The Index has experienced another sharp decline since November
10, 2017, with the level of the Index decreasing approximately 16%
in 27 calendar days, in addition to the persistent decline
experienced during recent years. Continued weakness in the Henry
Hub Natural Gas futures markets may result in a significant decline
in the level of the Index in the months ahead, which in turn may
result in the daily redemption value of the ETNs continuing to
decline significantly and potentially to $0.
The listing rules of the Exchange provide that the ETNs may
be subject to delisting from the Exchange if the aggregate
market value or the principal amount of the ETNs publicly held is
less than $400,000. If the ETNs are delisted from the Exchange, the
secondary market for the ETNs may experience a significant drop in
liquidity, and holders of the ETNs may not be able to trade or sell
their ETNs easily.
Recently, a material premium has also developed in the trading
price of the ETNs on the exchange in relation to their intraday
indicative value. From January 3, 2017 to December 7, 2017, the
closing indicative value (also referred to as the daily redemption
value) decreased by approximately 88% from $0.52 to $0.062 per ETN,
while the closing price of the ETNs on the Exchange decreased by
only approximately 55% from $0.59 to $0.267 per ETN. The closing
price of the ETNs on the Exchange as of December 7, 2017 reflected
a 327% premium to the corresponding closing indicative value.
Because further issuances and sales from inventory of the ETNs
remain suspended, there are likely to be continued fluctuations in
this premium if strong interest from exchange participants in
purchasing the ETNs continues.
Investors should exercise extreme caution before purchasing
or selling ETNs at a market price that reflects a premium over the
intraday indicative value or daily redemption value, as the case
may be. The “intraday indicative value” of the ETNs is intended
to provide investors with an approximation of the effect that
changes in the level of the Index during the current trading day
would have on the daily redemption value of the ETNs from the
previous day. The intraday indicative value of the ETNs is
calculated and published with a frequency of at least every 15
seconds throughout the trading day, under the ticker symbol GAZ.IV.
The “daily redemption value” (or “closing indicative value”) is the
closing value of the ETNs calculated by us on a daily basis and is
used to determine the payment at maturity or upon early redemption.
As a result, if investors purchase the ETNs at a price which
reflects a premium over the intraday indicative value or daily
redemption value, as the case may be, they may experience a
significant loss if they sell the ETNs at a time when such premium
is no longer present, if they redeem the ETNs at the daily
redemption value or if they hold the ETNs until maturity.
For more information on what a premium in the market prices
represents, please refer to the iPath website under “About ETNs”.
Investors are also encouraged to refer to the prospectus relating
to the ETNs for risk factors relating to the market value of the
ETNs, including the risks associated with a premium in market
prices on the exchange.
Investors should not assume that the ETNs will continue to
trade at a premium in relation to their intraday indicative value
or daily redemption value, as the case may be. Any secondary
market premium could continue to decrease, even significantly, or
cease to exist entirely at any time. Given the market
conditions described above, anyone considering investing in the
ETNs or continuing to hold the ETNs should consider these risks
when making an investment decision and consult with their broker or
financial advisor to evaluate their investment in the ETNs.
In addition to the notice on March 8, 2017, Barclays has issued
similar investor guidance notices on November 9, 2015 and December
22, 2015 regarding the decline in the daily redemption value of the
ETNs and likelihood of premiums and discounts in the secondary
market prices to persist.
Barclays has also announced the listing of a new ETN (the “New
ETNs”) (Ticker: GAZB) linked to the same Index earlier this year.
The New ETNs offer a similar exposure as the existing ETNs (the
“Old ETNs”), but will include certain differences, including a
reduced investor fee and an issuer redemption feature. Please refer
to the associated press release on March 8, 2017 for more
details.
Holders of the Old ETNs that wish to sell their Old ETNs and/or
purchase New ETNs may take any of the following actions:
1) Sell Old ETNs and/or purchase New ETNs on
the secondary market at the prevailing trading price on the
exchange;
2) Put Old ETNs to Barclays (including with
respect to the valuation date occurring on each Wednesday with
reduced minimum early redemption sizes) and simultaneously purchase
New ETNs from Barclays in an amount having an equal dollar value,
with each transaction having the same valuation date and settlement
date (a “Net Settlement”). In this case, upon redemption of its Old
ETNs, the holder would receive a number of New ETNs equal to the
aggregate daily redemption value of the redeemed Old ETNs, rounded
to the nearest full New ETN, with a residual cash payment for any
“partial” remaining ETNs. Holders who wish to effect a Net
Settlement must instruct their broker or other person through whom
they hold their Old ETNs in accordance with the prospectus for the
Old ETNs. Holders may also contact Barclays at
etndesk@barclays.com or 1-212-528-7990 to obtain further
information regarding the procedures for Net Settlement.
3) Put Old ETNs to Barclays under the early
redemption option without simultaneously purchasing New ETNs or
purchase New ETNs from Barclays without simultaneously redeeming
Old ETNs, in each case for the applicable cash value.
Any redemption of Old ETNs or sale of New ETNs is subject to the
conditions described in the prospectus for the relevant series of
ETNs and will be valued using the applicable daily redemption value
or closing indicative value on the valuation date for the
transaction, with no additional purchase or redemption fees, in
each case in accordance with the prospectus for the relevant series
of ETNs. Holders are not required to take any of the actions set
forth above and may choose to continue to hold their ETNs at any
time.
The ETNs are riskier than ordinary unsecured debt securities and
have no principal protection. The ETNs are unsecured debt
obligations of the issuer, Barclays Bank PLC, and are not, either
directly or indirectly, an obligation of or guaranteed by any third
party. An investment in the ETNs involves significant risks,
including possible loss of principal, and may not be suitable for
all investors.
Daily redemptions at the option of the holders of the ETNs
continue to stay open. The prospectus relating to the ETNs can be
found on EDGAR, the SEC website at: www.sec.gov, as well as on the
respective product websites at www.iPathETN.com/GAZprospectus and
www.iPathETN.com/GAZBprospectus.
Barclays Bank PLC is the issuer of iPath® ETNs and Barclays
Capital Inc. is the issuer’s agent in the distribution.
For further information, please instruct your
broker/advisor/custodian to email us at etndesk@barclays.com or
alternatively, your broker/custodian can call us at:
1-212-528-7990.
Selected Risk Considerations
An investment in the iPath ETNs described herein involves risks.
Selected risks are summarized here, but we urge you to read the
more detailed explanation of risks described under “Risk Factors”
in the applicable prospectus supplement and pricing supplement.
You May Lose Some or All of Your Principal: The ETNs are
exposed to any decrease in the level of the underlying index
between the inception date and the applicable valuation date.
Additionally, if the level of the underlying index is insufficient
to offset the negative effect of the investor fee and other
applicable costs, you will lose some or all of your investment at
maturity or upon redemption, even if the value of such index has
increased. Because the ETNs are subject to an investor fee and any
other applicable costs, the return on the ETNs will always be lower
than the total return on a direct investment in the index
components. The ETNs are riskier than ordinary unsecured debt
securities and have no principal protection.
The ETNs offer exposure to futures contracts and not direct
exposure to physical commodities: The ETNs offer investors
exposure to the price of New York Mercantile Exchange-traded Henry
Hub Natural gas futures contracts and not to the spot price of
Henry Hub Natural Gas. The price of a commodity futures contract
reflects the expected value of the commodity upon delivery in the
future, whereas the spot price of a commodity reflects the
immediate delivery value of the commodity. A variety of factors can
lead to a disparity between the expected future price of a
commodity and the spot price at a given point in time, such as the
cost of storing the commodity for the term of the futures contract,
interest charges to finance the purchase of the commodity and
expectations concerning supply and demand for the commodity. The
price movement of a futures contract is typically correlated with
the movements of the spot price of the reference commodity, but the
correlation is generally imperfect and price moves in the spot
market may not be reflected in the futures market (and vice versa).
Accordingly, the ETNs may underperform a similar investment that
reflects the return on the physical commodity.
Credit of Barclays Bank PLC: The ETNs are unsecured debt
obligations of the issuer, Barclays Bank PLC, and are not, either
directly or indirectly, an obligation of or guaranteed by any third
party. Any payment to be made on the ETNs, including any payment at
maturity or upon redemption, depends on the ability of Barclays
Bank PLC to satisfy its obligations as they come due. As a result,
the actual and perceived creditworthiness of Barclays Bank PLC will
affect the market value, if any, of the ETNs prior to maturity or
redemption. In addition, in the event Barclays Bank PLC were to
default on its obligations, you may not receive any amounts owed to
you under the terms of the ETNs.
Market and Volatility Risk: The prices of physical
commodities, including the commodities underlying the index
components, can fluctuate widely due to supply and demand
disruptions in major producing or consuming regions. Additionally,
the market value of the ETNs may be influenced by many
unpredictable factors including changes in supply and demand
relationships (including as a result of redemptions of the ETNs
and, in the case of the New ETNs, sales from inventory and
issuances of New ETNs), governmental policies and economic
events.
A Trading Market for the ETNs May Not Develop: Although
the ETNs are listed on NYSE Arca, a trading market for the ETNs may
not develop and the liquidity of the ETNs may be limited, as we are
not required to maintain any listing of the ETNs.
No Interest Payments from the ETNs: You will not receive
any interest payments on the ETNs.
Restrictions on the Minimum Number of ETNs and Date
Restrictions for Redemptions: Except in the circumstances
described above, you must redeem at least the minimum number of
ETNs specified in the applicable prospectus at one time in order to
exercise your right to redeem your ETNs on any redemption date. You
may only redeem your ETNs on a redemption date if we receive a
notice of redemption from you by certain dates and times as set
forth in the pricing supplement.
Uncertain Tax Treatment: Significant aspects of the tax
treatment of the ETNs are uncertain. You should consult your own
tax advisor about your own tax situation.
The ETNs may be sold throughout the day on the exchange through
any brokerage account. There are restrictions on the minimum number
of ETNs you may redeem directly with the issuer as specified in the
applicable prospectus. Commissions may apply and there are tax
consequences in the event of sale, redemption or maturity of ETNs.
Sales in the secondary market may result in significant
losses.
“Bloomberg®”, “Bloomberg Commodity IndexSM”, “Bloomberg
Commodity Index Total ReturnSM”, “Bloomberg Natural Gas Subindex
Total ReturnSM” and “BCOM” are service marks of Bloomberg Finance
L.P. and its affiliates (collectively, “Bloomberg”) and have been
licensed for use for certain purposes by Barclays Bank PLC. Any
ETNs based on the Bloomberg Commodity Indices are not sponsored,
endorsed, sold or promoted by Bloomberg, UBS AG, UBS Securities LLC
(“UBS”), or any of their subsidiaries or affiliates. None of
Bloomberg, UBS AG, UBS Securities or any of their subsidiaries or
affiliates makes any representation or warranty, express or
implied, to the owners of or counterparties to the ETNs or any
member of the public regarding the advisability of investing in
securities or commodities generally or in the ETNs
particularly.
© 2017 Barclays Bank PLC. All rights reserved. iPath, iPath ETNs
and the iPath logo are registered trademarks of Barclays Bank PLC.
All other trademarks, servicemarks or registered trademarks are the
property, and used with the permission, of their respective
owners.
NOT FDIC INSURED · NO BANK GUARANTEE · MAY
LOSE VALUE
Barclays is a transatlantic consumer and wholesale bank with
global reach, offering products and services across personal,
corporate and investment banking, credit cards and wealth
management, with a strong presence in our two home markets of the
UK and the US. With over 325 years of history and expertise in
banking, Barclays operates in over 40 countries and employs
approximately 85,000 people. Barclays moves, lends, invests and
protects money for customers and clients worldwide.
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version on businesswire.com: http://www.businesswire.com/news/home/20171208005719/en/
Barclays Bank PLCAndrew Smith, +1
212-412-7521andrew.x.smith@barclays.com
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